12 March, 2013

Neighbourhood challenges

China-watchers are speculating on the implications of Beijing’s
involvement in infrastructure projects in Sri Lanka and the Maldives,
two small countries where India has vital strategic interests. Foreign
media accounts speak of a “string of pearls” from Pakistan to Myanmar,
comprising Chinese-funded port development projects.

The largest
of these is the Hambantota port in southern Sri Lanka, the first stage
of which, built at a cost of $360 million, was opened to ships in 2010.
When its second stage, for which China has provided $810 million, is
completed, it will become the largest port in the region.

Conceived
as a refuelling and service point for cargo vessels, Hambantota is
expected to handle about 45,000 metric tonnes (MT) of ship fuel this
year. In the next two years its handling capacity will go up to
125,000MT. China has also offered $500 million for the expansion of the
Colombo port.

Since 2007 China has committed $6.4 billion for
various projects in Sri Lanka. Out of this $3.6 billion has been
disbursed. An international airport for which China lent $209 million is
due to open next week. Chinese companies have secured at least 14 major
infrastructure projects in the island without going through the tender
process.

Already Sri Lanka’s biggest partner in trade and
development, China is all set to assume an even bigger role in its
economy. The country expects China to provide more than half of an
estimated $21 billion needed for various projects in the next three
years.

In the last decade China’s trade with the Maldives has
grown from $3 million to $60 million. When the country terminated its
airport agreement with the Indian company GMR there were insinuations
that it was acting at China’s behest. Later, Maldivian Defence Minister
Mohammed Nazim visited China, leading to speculation that President
Mohammed Waheed, who seized power ousting elected president Mohamed
Nasheed, plans to take relations with China beyond diplomatic and
economic levels.

When the Maldives sought a soft loan from China
for information technology and communications projects, India was
concerned it may have implications for its own security.

The US
Congressional Research Office, in a report two years ago, had said China
was “building or wanting to build” naval bases along the sea lane
linking it with Gulf oil sources. China, it added, was following a
“places, not bases” strategy: it was building commercial ports, not
military bases.

Around the same time the International Institute
for Strategic Studies, London, quoted a retired Chinese naval officer
as saying China might set up its first overseas base somewhere in the
Middle East. However, the Defence Ministry denied any overseas base was
planned.

The emergence of divergent voices from China may be
indicative of differences of opinion within its powerful political
establishment. Contrary to the conventional view of foreign experts,
different views are known to be in contention within it.

Justifying
China’s increased presence in the Indian Ocean, Sri Lankan Defence
Secretary Gotabaya Rajapaksa, who is a brother of President Mahinda
Rajapaksa, points out that it has a vital interest in the region as it
imports 200MT of oil a year to sustain its industry-intensive economy.
The Chinese-aided projects in the island are purely commercial, he says.

Sri
Lanka receives investments from India, the US and Japan also but they
cannot match cash-rich China’s soft loan terms. China provides
assistance in the form of cash grants, interest-free loans and long-term
concessionary loans on which the interest rate may be as low as two or
three per cent.

Some domestic analysts disapprove of Sri Lanka’s
excessive dependence on China. A former diplomat, Dayan Jayatilleka,
reminds the administration that, unlike Pakistan, Sri Lanka has no land
link with China, and it is highly improbable that China will bruise its
relations with India over anything other than its own core interests.

While
the interests of India and China do not always coincide the two are
sensitive to each other’s vital concerns. Attempts by China to
understand India’s position in Afghanistan, which is at variance with
that of its long-time ally Pakistan, is a case in point.

The
most worrisome aspect of India’s relations with its small neighbours is
not China’s growing economic links with them but its own diplomatic and
political failures. It has not been able to persuade Sri Lanka to give
its Tamil minority a fair deal or the Maldives to respect the rules of
democracy. -- Gulf Today, Sharjah, March 12, 2013.